Accounting news round-up - Spring/ Summer 2025

This spring and summer 2025 brought in several major updates to accounting rules and reporting standards across the globe. From new rules under IFRS 18 and US GAAP, to sustainability reporting changes and clearer guidance for auditors, there’s a lot happening.

In this post, we’ll break down the biggest developments from recent months in a simple, straightforward way.

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IFRS 18: A New Chapter for Financial Statement Presentation

One of the biggest updates this year is IFRS 18 - Presentation and Disclosure in Financial Statements, a new accounting standard that changes how companies present their financial statements. Issued by the International Accounting Standards Board (IASB), IFRS 18 aims to make financial reports more consistent and easier to compare.

• Supersedes IAS 1 - Presentation of Financial Statements

• Requires entities to;

  • improve comparability by presenting defined totals and subtotals and classify income and expenses into categories such as operating, investing, and financing.

  • disclose information about management-defined performance measures (MPMs). This is to help users understand the key performance indicators (KPIs) that management use and how this compares to IFRS defined measures.

• Effective for financial statements with year/ period beginning on or after 1 January 2027. Upon adoption, entities need to apply retrospectively to the comparative period and prepare a reconciliation to amounts disclosed in the previous accounts prepared under IAS 1.

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US GAAP: Recent Accounting Standards Updates (ASUs)

The Financial Accounting Standards Board (FASB) has also released several important updates for companies following US GAAP.

1. Crypto Asset Accounting (ASU 2023-08)

Whereas before, crypto-currencies such as Bitcoin and Ethereum were treated as intangible assets with an indefinite useful economic life (UEL), i.e. a cost less impairment model, entities will now be required to measure crypto-assets at fair value with changes reflected through profit and loss/ net income. This now allows both the upside and downside movement of crypto-assets to be recognised in financial statements.

Crypto-assets are now required to be disclosed separate from other intangible assets, as well as enhanced disclosure requirements for each significant holding including name, number of units, cost basis, and the method to calculate gains and losses.

This standard under subtopic 350-60 is effective for years beginning after 15 December 2024.

2. Joint Venture Formations (ASU 2023-05)

A joint venture is a separate and specific business or project that is owned and operated by a small group of business (the venturers), typically used to share the risks and rewards in a developing new market, product or technology. This update gives clearer guidance on how to account for new joint ventures including;

• Initial measurement of contributed assets and liabilities at fair value, aligning joint venture accounting with general business combination rules, and

• Recognition of Goodwill, or gain on formation, depending on the fair value of the net assets contributed versus the ownership interests.

This is to help make joint venture financial reporting more transparent and comparable both between entities, and to merger and acquisition accounting.

This standard under subtopic 805-60 is effective for years beginning after 1 January 2025.

3. Variable Interest Entities (ASU 2025-03)

A variable interest entity (VIE) is a legal structure for an entity where controlling interest is determined by something other than voting rights. Where most businesses are controlled dependant on share ownership, controlling interest in VIEs are determined by a contractual relationship. Investopedia has a very good overview of VIEs for further reading.

ASU 2025-03 provides new;

• Guidance to help determine which party is the accounting acquirer to improve consistency in how acquisitions are recorded.

• Rules to align VIE business combinations to follow the same principals as other general business combinations, including joint ventures as discussed above.

These updates aim to reduce confusion and enhance comparability in transactions involving VIEs, commonly used in industries like real estate, private equity, and franchising.

This standard under topics 805 and 810 is effective for years beginning after 15 December 2024.

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Sustainability Reporting: CSRD and ISSB lead the way

Sustainability reporting is one of the fastest-growing areas in accounting. Two major frameworks are shaping the landscape:

1. EU’s Corporate Sustainability Reporting Directive (CSRD)

From 2025, thousands of companies in Europe must report on environmental and social topics under CSRD.

This includes:

• Greenhouse gas emissions

• Diversity and inclusion

• Climate risk management

2. ISSB Standards (IFRS S1 & S2)

The International Sustainability Standards Board (ISSB) is rolling out a global baseline for climate and sustainability disclosures. The spring 2025 meetings focused on easing requirements for small companies and aligning with other standards.

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“Going Concern” & Audit Guidance Updates

Knowing whether a company is likely to stay in business is crucial for preparing and auditing financial statements. In 2025, the IASB and the International Auditing and Assurance Standards Board (IAASB) released clearer guidance under ISA570 on how to assess a company’s “going concern” status. From periods beginning on or after 15 December 2026, auditors are now required to;

• Explicitly and earlier identify events and conditions that may cast doubt on an entity's going concern, and thoroughly document their evaluation.

• Evaluate managements assessment of going concern including review of cash flow forecasts and mitigation plans.

• Include a separate “Material Uncertainty Related to Going Concern” section in the Audit Report to clearly explain the uncertainty, if such a risk exists.

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Global Ethics & Alignment Efforts

Several global organisations—including the International Federation of Accountants (IFAC), the IAASB, and the International Ethics Standards Board for Accountants (IESBA) are continuing efforts to align ethical and assurance standards internationally. A key focus in 2025: developing a consistent global approach to assuring sustainability disclosures, so stakeholders can trust what companies report.

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Key Takeaways

Topic	Key Change	Effective Date
IFRS18	New financial statement presentation rules	Periods beginning 1 January 2027 or after
US GAAP	Updates for crypto, joint ventures, and VIEs	2025/ 2026
CSRD	Mandatory sustainability reports	Reporting in 2025
ISSB	Climate and ESG baseline standards	Rolling implementation
Going Concern	Updated audit and reporting guidance	Mid 2025

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